Second time round on the NFC hype-cycle?

Today, NXP drastically revised its 2011 NFC sales forecasts – in fact it more than halved them. This follows several months of NFC excitement in the mobile space as big players clamoured to announce their rival offerings. Haven’t we been on this NFC hype cycle before?

This summer the US operator consortium Isis – comprising AT&T, T-Mobile USA and Verizon – announced it had signed up Visa, MasterCard, Discover and American Express as payment partners. In the UK a similar operator led consortium made up of Vodafone, Telefonica UK and Everything Everywhere also launched. Meanwhile Citigroup and MasterCard joined the Google Wallet bandwagon while rumours of an Apple-PayPal partnership abound.

Perhaps NXP was a little hasty with positive NFC predictions and these will ultimately appear at some point next year. Alternatively, maybe this is further proof that we’re simply revisiting the NFC hype-cycle of a few years back. After all the NXP news follows research from online retailers Retrevo which found the public appetite for the technology distinctly underwhelming. NXP raised the age old payments issue of the business model. Who gets what cut? Who is going to make it worthwhile for device manufacturers to add it to handsets?

Perhaps the imminent iPhone 5 will arrive packing NFC and justify the hype or perhaps it won’t – nobody yet seems sure. It would certainly be out of character for Apple to be so early with a new technology like NFC (remember the first iPhone was 2G). The alternative is that NFC-based mobile payments may have the same impact as Apple’s take on video calling in FaceTime - the big new addition to the iPhone 4 (ie. neat technology but no real public demand).

Further complicating matters is that NFC technology may still not be ready for mobile transactions. Nokia’s beautiful-yet-doomed N9 has NFC but it lacks the security for payments – this is true of several NFC enabled handsets. Transport for London said SIM-based NFC is not yet fast enough for m-ticketing use. It seems too early to make a call on whether the current mobile-NFC hype is justified. I wouldn’t bet on it quite yet.